Sufficiency Economy Philosophy: A Model for Sustainable Development Mario T. Tabucanon

1. Sufficiency Economy Philosophy:A Model for Sustainable Development Mario T. Tabucanon Visiting Professor, UNU-IAS Professor, Asian Institute of Technology Presentation at the 3rd ASEAN-Plus-Three Leadership Programme on Sustainable Production and Consumption 6-7 October 2010, Bayview Park Hotel, Manila, Philippines

2. The Sufficiency EconomyPhilosophy (SEP) • His Majesty, the King of Thailand developed SEP • HM introduced SEP in all Royal Projects in Thailand (Since 1974) • SEP is a model for achieving SD • SEP is the overarching principle in the 9th and current (10th) Thailand National Economic and Social Development Plans, 2001-2006 & 2007-2012

3. Philosophy of “Sufficiency Economy” • “Sufficiency Economy” is a philosophy that stresses the middle path as an overriding principle for appropriate conduct at all levels of society-.individuals, households, community,organizations or government

4. 1992: During economic boom, HM • warned against hastily jumping • into the wind of “Asian NICs” • and “Asian Tigers.”. • 1997: Indeed, Thailand suffered • during the Asian financial crisis. • But due in part to the application of • SEP, Thailand had recovered relatively • fast. ”

5. Although His Majesty has been talking about sufficiency economy since 1974, it was only in 1997 at the height of the financial crisis that HM began to use the term “Sufficiency Economy”.

6. Components of SEP • “Sufficiency has three components: moderation; reasonableness; and the need for built-in resilience against the risks which arise from unwanted internal or external change.”

7. Main Components of Sufficiency Economy (1) Moderation Sufficiency Economy (2) Reasonableness (3) Self-Immunity Conditions: SEP Will work best if there is(1) Application of appropriate knowledge and prudence (2) Adherence to morality

9. Moderation “Immune” System Reasonableness ชีวิต/เศรษฐกิจ/สังคม Leading to สมดุล/มั่นคง/ยั่งยืน Frameworks of the 9th & 10th Plans HM King’s Philosophy of "Sufficiency Economy” The Middle Path Wisdom Condition (an application of knowledge with due consideration and prudence ) Moral Condition(honesty, integrity, diligence, patience, perseverance) Life/Economic/Social Balance/Stable/Sustainable

10. GLOBAL KNOWLEDGE POOL EXPLODED & CONNECTED PARTIAL INFORMATION WRONG INFORMATION MISINFORMATION ICT KNOWLEDGE ACCESS KNOWLEDGE VALIDATION KNOWLEDGE VALUATION Ethical Values governing TECHNOLOGY ASSESSMENT SUSTAINABILITY KNOWLEDGE-BASED DEVELOPMENT & PROBLEM-SOLVING CONTEXT, SITUATION, LOCATION, & TIME DEPENDENT

11. Discoveries & Innovations Patents & monopoly Pricing of technology ESCALATION of Cost of Technology Knowledge-generating Countries KNOWLEDGE DIVIDE Needs for technology Limited resources POORER Knowledge-importing Countries IMMUNITY ?

12. CULTIVATE ETHICS & MORALITY “Uneducated person can do petty corruption, Educated can do deliberate ones”. • PROHIBITIONS • Dishonesty, plagiarism • 2. Academic lie New Ethics eg. brain death, GMO, stem cells, global warming, democracy, corporate social responsibility SUSTAINABILITY Natural resources Environment Consumption Production

13. How does SE relate to Neoclassical Economics? Y MaxS (1+r)-tE[U(C,..,t)] Subject to Budget Constraints Optimality A Preference X

14. How does SE relate to Neoclassical Economics? Y “Satisfice”S (1+r)-tE[U(C,..,t)] Subject to Budget Constraints Middle path solution A Preference X

15. Difference between SE and Neoclassical Economics Neoclassical Economics Sufficiency Economy Optimality Middle path • Depend on Preference, and Constraints to Maximize Utility • Choose middle path based on moderation, reasonableness and self-immunities – “Bounded Rationality” or “Satisficing”

16. Prudent Person Applications of Neoclassical Economics Neoclassical economics tries to understand human choices and explains the observed pattern using the optimizing framework Risk Loving Social Status Lack of Self Discipline Addiction Risk Averse Short-sighted Long-sighted Envy Prudence Human behavior

17. SE and Human Behavior Prudent Person (1) Moderation (2) Reasonableness (3) Self-Immunity The behavior of those who adhere to SEP will be similar to the behavior of “prudent persons”.

18. Misconceptions concerning SEP 1. Sufficiency Economy is about self-sufficiency: This is a misconception. • SE concept entails a two-stage process: the first stage involves basic sufficiency, or relative self-sufficiency, and once a firm foundation is established, one can progress to a second stage of advanced sufficiency.

19. Misconception 2. Sufficiency Economy is anti-globalization and leads to the closing-up of the economy: This is a misconception • The two-stage principle of Sufficiency Economy suggests that in order to cope with globalization, we first need to build a strong foundation for the country and proceed cautiously with an awareness of the risks involved.

20. SEP strategic framework for a country in the globalization era Build a strong domestic economy and improve networking at all levels (local, national & global) Liberalization of key sectors has to be carried out in steps and to be consistent with the country’s state of readiness Proper supply-side management policy to help withstand the shocks and volatility arising from external factors

21. Misconception 3. That ‘Economy’ in the term ‘Sufficiency Economy’ only refers to the conventional concept of ‘Economics’. This is a misconception. • ‘Economy’ in SE encompasses the triple bottom line – Economics, Social & Way of Life, and Environmental.

22. Misconception 4. Sufficiency Economy is only applicable in the agricultural sector and rural areas: This is a misconception • Sufficiency Economy is a philosophy that helps guide the behavior of each individual and can be applied to all sectors of the economy

23. Applications of Sufficiency Economy Philosophy 1. Daily life 2. Economic Development - Moderation - Reasonableness - Self-immunity - Agricultural/Community Development - Business Practices - Government Policies Sufficiency Economy

24. SEP Applications to Daily Life • As guiding principle in daily activities: Especially in answering questions such as : How should we act? Which items should we buy? How should we live our lives? Together, the answers to these questions will help define what it means to “live according to a sufficiency lifestyle”.

25. Example: Buying a House If we try to follow SEP, then we have to ask ourselves at least three questions: • First, whether this house is a suitably moderate choice, given limited resources. • Second, whether it is a reasonable thing to do to buy a large house just to show it off occasionally to our friends. • Third, whether the financing of this particular house will leave the buyer vulnerable to adverse effects that might happen in the future.

26. CONSUMERS AVOID EXCESSIVE OVERCONSUMPTION BEHAVIORS UNNECESSARY DESIRE NATURAL DESIRE Longest life Youthfulness Beauty Ease of living Enjoyment Recreation etc. Anti-oxidant food supplements/ potions/ drugs Cosmetic surgery Addictions: drugs, non-drugs, sugar, lifestyles Satiety for violence, sex, extremes

27. CONSUMERS KNOWLEDGE & WISDOM For Rational Decision IMMUNITY against seduction & addiction NECESSITIES IN LIFE Food Energy Water Transportation Communication Housing etc. ‘AFFLUEZA’ ELECTRICITY, FOSSIL FUEL, PETROLEUM INFRASTRUCTURES OBESITY

28. OBESITY In Thailand, up to 30% of adults and adolescents reached “obese” range. From 1986 to 2008, the situations were getting worse. Change of food habits from rice, vegetables and fruits to Western style of food – food of high fat, protein & sugar MOTIVATION Public ExercisePrograms Prohibition of sale of junk food in schools. Soaring sale of “food supplements” claimed to control weight. Advertisement, promotion & direct sale Booming of spa and exercise businesses

29. Advertisement Luxurious houses From 18.5 million baht Advertisement Luxurious cars from 10 million baht International Watch Fair over 1 million baht Trade Fairs Trendy fashion SUFFICIENCY ECONOMY Individuals: resisting me-too temptation Society: virtue of saving, shame for showing off luxuries.

30. SELF CONTROL OF DESIRE Restraint against profit from desire-based trade DESIRE-BASED TRADE BUSINESSES Cosmetics Health Health food Spa Exercise Weight control Sport Lottery Advertisement, Sale Promotion

31. Spiritual Dimension of SEP • “If one is moderate in one’s desires, one will have less craving. If one has less craving, one will take less advantage of others. …Sufficiency means to have enough to live on. Sufficiency means to lead a reasonably comfortable life, without excess, or overindulgence in luxury, but enough….” (Royal Speech, given at Dusit Palace, 4 December 1998)

32. Agricultural and Community Development

33. Thai agriculture in the recent past - Monoculture • Problems from Monoculture • Problems from Supply/Demand Adjustment • Weather • Debt Problem- Migration and weakness of the villages

36. New Theory of Agriculture • Emphasizes diversified farming techniques and the need to develop the communities, stage by stage, by laying down a firm foundation first.

37. New Theory for Agriculture 1. First step The aim is to let the farmers be able to support themselves (self-sufficiency) especially concerning rice. If the main problem is water then they should dig a pond in their land to make sure that they have enough water for farming and household usages which they might need support from the government or private sector in digging the pond. (30% water, 30% rice, 30% vegetables/fruits/livestock, and 10% house of the total area)

38. New Theory 2. Second step Farmers should work together and create a cooperative to reduce the cost of production and for saving purposes as well as social security and together they will also have more negotiating power in selling their products to the markets.

39. New Theory 3. Third step For developed communities, further expansion of the production process and commerce such as cooperative stores or rice milling factories can rely further from the cooperation from commercial banks in improving their livelihood.

44. Procedure of the New Theory 1st phase: Implementation / Production Advising/ Experimenting Getting results Implementing Support from outside 2nd phase: Expansion / Marketing Joining forces Better living conditions Production / Marketing Support from outside 3rd phase: Advancement / Processing / Adding Value Cooperation/ Capital Sustainable development Quality of life Support from outside

45. Benefits of the New Theory Steady and higher income margin Farmers and their children have better education opportunities Agriculture in accordance with the New Theory Better learning/ education Advice, consultations: Farmer-farmer Official- farmer Knowledge and learning on the job Monitoring of news and information on farming practices

46. Farm Families and Communities: Socio-economic Impact Job available the whole year round Work in the locality Family members joining activities, spending more time together, taking good care of children and the elderly Diverse activities, perennial trees, fruits, vegetables, livestock More frequent harvests Steady and higher income margin

47. Strengthened Community Members of working age are kept in the locality Working force is available for community work and other communal work in the rice fields and plantations Diverse activities, perennial trees, fruit trees, vegetables, livestock Steady incomes Higher incomes Equitable distribution of income Strengthened community Different harvest times Increased and diverse production Organizing as groups Or cooperatives for production, marketing, welfare Sufficient food Resources in the rice fields are better utilized in turn Dependence on outside sources is reduced

49. Business Practices

50. For the Corporate Sector SEP suggests Greater emphasis on: • good risk management, • well thought-out business plans, • sustainable investment, • good corporate governance, • good corporate citizenship in terms of taking on corporate social responsibilities (CSR).